Oil retreated below $52 a barrel as data showing record US crude production suggested markets may remain oversupplied despite output cuts by Organisation of Petroleum Exporting Countries and its allies.
Futures lost 1.1% in New York, trimming gains of 3.6% over the past two sessions.
Booming American output is weighing on prices even as the OPEC+ coalition implements supply cuts announced late last year.
Saudi Arabia reduced shipments to US refiners by a third last week, while Russia said it will meet its target for curbing production by April.
While crude has bounced more than 20% from the low on Christmas Eve, it’s still below a four-year peak reached in October.
Whether prices will remain in a bull market largely depends on the effectiveness of the curbs by the OPEC and its allies in the face of surging US supply. At the same time, concerns persist in global markets over a slowdown in economic growth, hurting appetite for risk assets.
"US production growth, notably shale, is set to continue growing at a robust rate," said Ehsan Khoman, head of Middle East and North Africa research and strategy at MUFG Bank in Dubai.
"This puts OPEC+ in a spot of bother, as the more they act to support prices, the more challenging it is to gain market share."
West Texas Intermediate crude for February delivery lost as
much as 72 cents to $51.59 a barrel on the New York Mercantile Exchange, and
was at $51.74 as of 09:57 London time. Futures settled up 20 cents at $52.31 on
Wednesday, extending their advance for a second day.
Brent for March settlement fell 59 cents to $60.73 a barrel on the London-based ICE Futures Europe exchange, after closing up 68 cents on Wednesday. The global benchmark crude was at an $8.70 premium to WTI for the same month.
In America, crude production climbed by 200 000 barrels last week to 11.9 million barrels a day, the highest level in weekly figures compiled by the Energy Information Administration since 1983.
While nationwide inventories dropped for a sixth time in
seven weeks to the lowest since early November, stockpiles of gasoline and
distillates rose by more than twice the amount estimated in a Bloomberg survey –
a troubling sign for crude demand.
Saudi Arabia slashed its crude shipments to refiners in the US by 32% to 684 000 barrels a day in the week ended January 11, after exporting more than 1 million barrels a day the previous week, according to preliminary data from the EIA.